September 10, 2004

New development charges go into effect in January

The City of Kitchener is bringing in new development charges that are geared towards reducing urban sprawl.

The new charges will establish a Central Neighbourhoods rate for residential development that is lower than the rate in the suburbs.

Under the new development charges schedule, builders of new homes in Central Neighbourhoods will see their rates decrease by approximately 17 per cent.

Residential rates in the Suburban Area are being increased approximately 20 per cent.

Residential and nonresidential development in the Downtown Core will continue to be exempt from paying city and regional development charges.

“This rate more accurately reflects the cost of providing new infrastructure for growth in the inner city, in contrast to the higher cost of providing infrastructure for suburban growth,” city officials said.

The rates also support the city’s goal of promoting construction in areas that are already developed, to reduce urban sprawl.

Under the new plan, the nonresidential development charges will increase for both the Central Neighbourhoods and the Suburban Area, but they will still be lower than rates in nearby cities.

The new residential rates for Kitchener are in line with the rates and proposed rates in the cities of Cambridge and Waterloo. The new nonresidential rates are lower than those in Cambridge or Waterloo.

The city says the new charges will better reflect the cost of providing services to new developments in Kitchener.

A bylaw governing the rate officially went into effect recently, but the new rates will not be applied until Jan. 1, 2005, in order to allow for a period of adjustment in the local development market.

Municipalities impose development charges on new buildings to offset the cost of providing engineered services, such as watermains, sanitary sewers, and pumping stations to the structures.

The charges also help pay for soft services such as parks and recreational services, libraries, and fire services.

In brainstorming on the new charges, Kitchener took into account growth forecasts provided by the Region of Waterloo.

A stakeholders group also provided extensive feedback and dialogue throughout the planning of the new development charges.

The group included local homebuilders, the city’s economic development advisory committee, residential and nonresidential developers, consultants, realtors and others. The city also presented background studies to various groups, and provided public notice.

The consultation process resulted in a number of major changes to the rates that were originally proposed in a draft in April.

During the consultation process, the city took another look at population forecasts, providing a 20-year horizon for engineering services instead of the original 10-year horizon.

The city also implemented a three-percent decrease because of changes to GST collection, reviewing costing for some community services, and delaying the rate increase until January 2005.

City council concluded that while Kitchener had experienced remarkable residential growth over the past five years, the growth was not as high as the region had forecasted in its report.

The new charges ended up being based on revised growth forecasts that were somewhat more conservative than the region had provided.

—Grant Cameron

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